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QQQ   437.60
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S&P 500   5,078.18
DOW   38,972.41
QQQ   437.60
3 lithium stocks to ride a multi-year cycle
Is Gold Really Boring? (Ad)
Goldman upgraded Nvidia stock, one metric says it could go higher
Autozone stock price is still in the rally zone
Hunting for Domestic Vanadium - The U.S. Govt. Did WHAT? (Ad)
New highs are coming for Lowe’s stock despite mixed results
Closing prices for crude oil, gold and other commodities
Critical asset just had biggest fall on record (Ad)
Consumer confidence slips in February as anxiety over potential recession surprisingly reappears
Beyond Meat's shares soar on better-than-expected Q4 revenue despite weak US sales
S&P 500   5,078.18
DOW   38,972.41
QQQ   437.60
3 lithium stocks to ride a multi-year cycle
Is Gold Really Boring? (Ad)
Goldman upgraded Nvidia stock, one metric says it could go higher
Autozone stock price is still in the rally zone
Hunting for Domestic Vanadium - The U.S. Govt. Did WHAT? (Ad)
New highs are coming for Lowe’s stock despite mixed results
Closing prices for crude oil, gold and other commodities
Critical asset just had biggest fall on record (Ad)
Consumer confidence slips in February as anxiety over potential recession surprisingly reappears
Beyond Meat's shares soar on better-than-expected Q4 revenue despite weak US sales
S&P 500   5,078.18
DOW   38,972.41
QQQ   437.60
3 lithium stocks to ride a multi-year cycle
Is Gold Really Boring? (Ad)
Goldman upgraded Nvidia stock, one metric says it could go higher
Autozone stock price is still in the rally zone
Hunting for Domestic Vanadium - The U.S. Govt. Did WHAT? (Ad)
New highs are coming for Lowe’s stock despite mixed results
Closing prices for crude oil, gold and other commodities
Critical asset just had biggest fall on record (Ad)
Consumer confidence slips in February as anxiety over potential recession surprisingly reappears
Beyond Meat's shares soar on better-than-expected Q4 revenue despite weak US sales

CVS Health Corporation Is Coiled And Ready To Spring Higher 

CVS stock

Key Points

  • CVS Health beat on top and bottom lines and gave good guidance. 
  • The stock is moving higher on news of another acquisition as well. 
  • Analysts' sentiment is clear, CVS is the choice above other drugstore chains. 
  • 5 stocks we like better than CVS Health

The price action in CVS Health NYSE: CVS has been coiling up over the last 15 months and it looks ready to spring higher. The latest earnings report confirms the trend and trajectory of growth and has the market moving higher even now. What this means for investors is a multiple potential expansions that could easily take it up to new all-time highs.

Trading at 10X its earnings it is a value relative to the broad market, it is forecasting growth and it pays twice the yield of the S&P 500. And this dividend is above average in quality as well. 

The company is paying out only 24% of its earnings and has such a strong balance sheet it was able to make another acquisition without the use of debt. In this light, not only is the outlook for growth robust, but so too is the outlook for dividend growth. The latest acquisition is Oak Street Health and has yet to pass regulatory approval. Oak Street is a primary care provider that is expected to add $2 billion in EBITDA to annual results by 2026.

It is also expected to result in around $0.500 billion in synergies which will drive margin improvement in the core and Oak Street segments. 

CVS Has Strong Quarter, Issues Strong Guidance 

CVS not only had a strong quarter but issued strong guidance as well. The takeaway from the guidance is that results are expected to align with the analyst's expectations without the addition of Signify, which is yet to be completed. As for Q4 2022, the company reported $83.8 billion in revenue for a gain of 9.4% versus last year.

The gains were driven by strength in all segments, led by Health and Pharma, which is good news for competitors like Walgreens Boots Alliance NASDAQ: WBA and Rite Aid NYSE: RAD. CVS revenue also outpaced the Marketbeat.com consensus estimate by 1000 basis points which is also good news for competitors. 


Moving down, the company was able to expand margins as well. The operating margin expanded by 290 basis points, and the net income margin by 160 to drive solid bottom-line results. The caveat is that 1-offs in the report mean the $1.99 in earnings is up a slim $0.01 versus last year but outpaced the consensus by $0.06. Turning to the guidance, the company is expecting adjusted EPS of $8.70 to $8.90 versus the $8.86 expected by the analysts. 

The Analysts Prefer CVS Health 

The Analysts prefer CVS Health to Rite Aid and Walgreens; that is clear. The consensus sentiment for CVS is a Moderate buy compared to Hold for Walgreens and Sell for Rite Aid. The price target for CVS is also favorable, as it implies more than 30% of upside and has been trending higher all year.

There are no new ratings or price targets on Marketbeat.com’s analyst tracking page yet, but they should be consistent with the trend when they come. 

The chart of CVS shows a 15-month range with 3 tops and 3 bottoms that are edging lower as they move sideways. This range is a coiled spring of bulls and bears that has this stock ready to unwind. Assuming the analyst's interest remains favorable, this market should unwind to the upside.

The next target for resistance is at the 150-day moving average, a move above that should get it back up near the all-time highs. If the company can progress on its plans, it may move to new highs by summer 2023 and meet or exceed the $119 consensus target. 

CVS Health Corporation Is Coiled And Ready To Spring Higher 

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Should you invest $1,000 in CVS Health right now?

Before you consider CVS Health, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and CVS Health wasn't on the list.

While CVS Health currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Rite Aid (RAD)
0.2272 of 5 stars
$0.00-100.0%N/A-0.04$1.00
Walgreens Boots Alliance (WBA)
4.5401 of 5 stars
$21.63+3.0%4.62%32.77Reduce$25.83
CVS Health (CVS)
4.9591 of 5 stars
$76.26-0.2%3.49%11.80Moderate Buy$90.00
Compare These Stocks  Add These Stocks to My Watchlist 

Thomas Hughes

About Thomas Hughes

  • tmhughes.writeon@gmail.com

Contributing Author

Technical and Fundamental Analysis

Experience

Thomas Hughes has been a contributing writer for MarketBeat since 2019.

Areas of Expertise

Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies

Education

Associate of Arts in Culinary Technology

Past Experience

Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights. 


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